I reached out to Ruth Pompey, McKees Rocks Borough Manager, in February 2018, with the offer to review the Borough’s insurance and risk management program. Ruth was initially skeptical, but felt it was worth having a conversation to see if we could solve some of their recent challenges.
During our first meeting, I wasn’t surprised by the issues they had with their insurance program. The Borough had been seeing annual increases in their insurance premium rates. At the same time, they were working through some unresolved claims.
When we discussed what their biggest frustrations were with their current insurance program, we identified four issues right off the bat:
- The Borough had gaps in their coverage and even suffered a partially-covered claim.
- Because of open claims, the Borough was experiencing annual premium increases.
- The Borough was not able to reduce the number of claims they filed each year, which also contributed to the premium increases.
- Other than during their yearly renewal, the Borough had very little communication with their agent.
4 Major Insurance Issues
After that initial meeting, I walked the Borough through the Baily Insurance Agency Blueprint Process – a process we take prospects through to uncover weaknesses in their current insurance program and to determine if our agency might be able to help with solutions. This is what we discovered.
1. Gaps in Coverage and a Partially-Covered Claim
After examining the Borough’s insurance policy in detail, it became clear that their policy was not meeting their expectations. The Borough had areas that they thought were covered, yet in actuality were left uncovered – potentially causing monumental expenses for the Borough.
One of these gaps had resulted in only a partially-covered water damage claim. The Borough was frustrated that they ended up having to pay for this claim, which they expected the insurance company to cover. Had their agent thoroughly explained what their policy did and did not cover, the Borough could have avoided this unpleasant situation.
The previous agent had also undervalued the Borough’s main building leaving it severely underinsured. He had written the policy with only $2 million worth of coverage, but after doing a replacement cost evaluation, we determined the building would cost over $4 million to rebuild – an enormous gap in coverage!
The agent had also underinsured the Borough regarding cyber liability coverage. As written, their policy would only cover up to $50,000 in cyber-attack expenses – expenses that in reality could easily exceed $100,000.
If something had happened to their main building or if the Borough had faced a cyber-attack, their losses could have been crippling. And these weren’t the only areas that the Borough needed more coverage.
2. Open Claims and Annual Premium Increases
Another shortcoming of the Borough’s insurance agent was a lack of advocacy when it came to claims management. When a business or organization has an open claim, the insurance company treats it as though they will have to pay out a maximum amount to fully cover the claim. This usually results in premium increases.
McKees Rocks Borough had two large open claims, which were resulting in insurance premium increases. After discussing these claims with Ruth, it became clear that the insurance company was greatly overstating the amount of money it would take to close these claims.
If their insurance agent had been in regular communication with both the insurance company and with the Borough, these claims could have been closed much quicker. As it was, the agent did not advocate on the Borough’s behalf to help them manage their claims.
3. No Plan for Claims Prevention
Another weakness in their insurance program was a lack of attention to claims prevention. A good insurance agent and/or company will help their clients with training employees to help reduce the number of claims they turn into the insurance company.
Additionally, having an effective safety committee in place can help an organization to take preventative measures to reduce the dangers and hazards that might cause a claim. With the help of their insurance agent, the Borough could have taken these practical steps to aid in reducing their claims.
The Borough’s insurance program did not have this type of safety plan in place.
4. Lack of Communication with Their Insurance Agent
Finally, the Borough was not in regular contact with their agent. Other than presenting their annual insurance renewal, the Borough’s insurance agent was not very responsive or helpful when the Borough had claims and insurance needs.
Their agent did not work with the Borough to create a long-term plan to reduce its premium rates. He did not communicate with them on safety issues that could have significantly reduced the number of claims filed each year.
Their agent was simply not giving them the time and attention they needed to implement and maintain a successful insurance program.
Shopping Around for a New Insurance Agent
Ruth was very pleased with our Blueprint presentation where we outlined the challenges the Borough was facing and the specific steps they could take to solve them. When she had shopped out their insurance the prior year, she was only given an insurance quote, which did not address the issues we uncovered.
Pleased with the initial Blueprint proposal, Mrs. Pompey extended Baily Insurance the opportunity to quote McKees Rocks Borough insurance that year.
New Insurance Solutions with Better Results
What the Borough received was more than their typical insurance proposal – they received an in-depth analysis of their insurance program identifying areas that they could improve to lessen the likelihood of claims.
1. Tailored Policy for the Borough’s Needs
As part of our process, we scoured their old policy to understand what coverages might be missing or underinsured. After a thorough review, we put into place coverages that aligned with the amount of risk the Borough was exposed to.
When asked why she would encourage other Boroughs and organizations to engage with Baily, Mrs. Pompey said, “With Baily, the Borough received significant savings. They also made us more aware of what we could do to mitigate our risk. And with Baily, we have more substantial coverage than before.”
2. Independent Claims Advocate
As part of our plan, McKees Rocks Borough received services that they had been lacking in the past. We partnered with East Coast Risk Management to help the Borough with its claims management processes. In turn, their claims are now handled in a much more timely and effective way, driving down insurance costs.
3. Claims Prevention Training
As part of the Borough’s comprehensive insurance program, we helped the Borough begin training their employees in claims prevention. We also attended a safety committee meeting to offer some recommendations to help prevent future claims.
In addition to safety, our agency assists the Borough with HR advice – a proactive way to lessen the likelihood of HR-related claims that many employers experience. We have found that these types of preventative activities need to be part of an ongoing process, because it really comes down to creating a safety and risk management culture, which takes time.
Mrs. Pompey acknowledged that many of the changes the Borough made were simple and easy to implement. She also noted that these changes have helped save the Borough a large amount of money over the past two years.
In fact, after years of premium increases, these measures have reduced the Borough’s premiums for two years in a row!
4. Responsive and Regular Communication
In terms of Mrs. Pompey’s concern about their former agent’s lack of responsiveness, working with Baily has been “a wonderful experience.” Being in regular communication with our team has impacted the Borough’s success in mitigating risk and addressing any new insurance needs and issues.
“We never had this kind of communication before,” Mrs. Pompey admitted. “They took time to break down where we could tighten things up.”
And tighten things up, they did! Together, the Baily team and the Borough have worked through a comprehensive plan to lessen their risks. According to Mrs. Pompey, “They helped us be more aware of what we could do to mitigate our risk.”
The Baily team has been very hands-on in helping the Borough implement solutions to keep their premiums lower and prevent claims from happening.
Partnering Together for Deep Savings
After writing their General Liability coverage, the Borough asked the Baily team to compete for their Workers’ Compensation insurance the next year. Again, the Borough was pleased with what Baily had to offer – both immediate savings and long-term solutions to lower their premiums.
On our end, we’ve enjoyed working with McKees Rocks Borough immensely. Their commitment to creating a culture of safety and actively taking a role in their insurance program has resulted in savings of over $80,000!
At Baily Insurance, we are committed to working with our clients to improve their risk management, provide comprehensive insurance coverage, and take steps to reduce their premiums. We do more than negotiate pricing – we partner with our clients for long-term results.
If you’re tired of the traditional way your insurance has been quoted, we invite you to check out what it looks like to partner with Baily Insurance Agency. If you want to partner with a team that will roll up their sleeves and helps you take practical steps to get a better return on your insurance program, we’re eager to work with you!